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So the first domino was still the subprime loans going bad?
And the companies that owned the loans not only lost the value of the loan but are also saddled with the debt they incurred to purchase the loan. So essentially, if I'm understanding this right, AIG failed to manage its risk exposure and exposed itself to too many high risk loans and compounded that mistake by borrowing money to facilitate that overexposure to risk. Wow, they deserve to go belly up.
Which brings me back to the point of my previous post, by bailing them out, we're not letting them suffer the market consequences of the gross miscaluclations. Which means they have no real incentive to stop taking such wild risks since they know the government will be there to bail them out.
So let me ask you this, is it true that AIG is "too big to fail"? It seems to me from your earlier reply you also favor breaking them up. Anything else you'd do? I take it we don't have any regulations on leveraging ratios, it that something worth looking into?
"If you wish to continue the "I hate OC and will make disparaging comments to him whenever I reply to him" go to the basement."
Saw that coming.
Leave the discussion to those who understand the nature of the bonuses. You clearly do not nor do you wish to learn.
Tell me OC, what do you think of Dodd writing in the protections of the bonuses at the request of the whitehouse, then pretending to be appalled?
:2wave:
That issue is far less important then the actual bonuses, and far less then the billions already used to nationalize AIG. Complaining about the political maneuvering about the bonuses ignores what actually matters. The retention bonuses made towards key employees who bring in large insurance profits should not be touched nor taxed more then normal. The goal is to extract our interest from AIG without massive losses. If those retention bonuses keep the employees who will help us get there, I don't care about the political maneuvering. Potential billion even trillion given their nominal CDS amounts is far more important then political chicanery.
How much money did AIG lose, and are these people getting bonuses for failing?
I think this sets a scary precedent.
I earlier provided a link regarding this. I suggest you read it. It explains quite a bit about retention, why it's good and the division between the two branches in AIG. I see no need to copy paste. That said, the 'retention' bonuses paid to employees who left is absolute garbage as are any bonuses paid to the FPS branch employees.
Perhaps, but these are scary times.
Yes I read that. while great in theory, do you have a link that shows this is how it went down? with a breakdows as to how much went to "fps" and former employees vs the insurance branch?
The breakdown is essentially what Congress is trying to subpoena. By getting the names of the bonus receivers we can see the actual breakdown. But given how small the FPS department is compared to the Insurance branch and the now known fact that bonuses were given to several thousand people, it seems highly likely that insurance employees received the retention bonuses.
Here's a non-partisan explanation of AIG's CDS problem:
AIG And The Trouble With 'Credit Default Swaps' : NPR
This is a different argument then. Most of the bailout bonuses went to other peoples, While you speculate it went to their insurance branch, even if it did, it is a small portion of the pie, no?
Incorrect. Statistically speaking, as at least a thousand people got retention bonuses and FPS is a percent of staff is on the minority side, it is highly likely that insurance employees got some bonuses.
As for the piece of the bonus pie, we'll have to see just how it breaks down. That's what the subpoena is for.
The insurance side got "some" of the bonuses? Sure, but by your information they are a small small portion of the total AIG, and therefore recieved a minute amount of the bonus money in total.
No? Or am I misunderstanding you.
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